The Wholesale Forums

[greedyboy]

As soon as I get a chance I will put something together, unfortunately due to a misspent childhood in the snooker halls, my writing skills aren't that great

Although I am not or claim to be an expert, I have had the pleasure of dealing the the lovely VAT man for many, many years (including a handful of VAT inspections which is another story!!!)

I am happy to answer any specific questions or concerns in the meantime.

[Anthony]

Originally Posted by greedyboy

Long winded, I know! Maybe I will write an article for the site when I get a few hours spare.

You missed the first one of these : TWF - Business Article Competition 2006 - You'll have to get your notepad out when we do another.

Looks like you have a lot of useful info to share!

[andy]

So when you sell goods if you are vat registerd your liable to pay repective of your markup.

So if you purchase goods for £100 and sell them for £150, £22.34 of that is VAT however you only need to pay £7.45 to the vat man so your profit (excluding selling costs) is £150 - £100 - £7.45 = £42.55 is that correct?

If so why is it cheaper for you to purchase from some one vat registered if their price is £85.11 + VAT.

Do you just pay the difference, or do you claim back vat you pay on the goods then send off vat you charge on them? in which case you would end up paying the full £22.34 on the goods in vat and not the £7.45 making profit £27.66 a £14.89 loss.

I think I have worked it out but not 110% yet.

[andy]

If the above is correct ther should be some way I can prove amount of Vat payed upon my purchase?

otherwise the government are making it very difficult for me to make money without registering for VAT.

[greedyboy]

Unfortunately that is a fact of life. You pay VAT on probably 90% of everything you purchase.

The reason why you can not make any money is down to the product you have chosen and not the government.

As said previously, even if you were VAT registered you could claim the VAT back but when you sell the item you have to add 17.5% VAT to the purchase price and therefore still making you uncompetitive to your target maket.

Ultimately you need to find products with a bigger profit margin.

[greedyboy]

Originally Posted by andy

So when you sell goods if you are vat registerd your liable to pay repective of your markup.

So if you purchase goods for £100 and sell them for £150, £22.34 of that is VAT however you only need to pay £7.45 to the vat man so your profit (excluding selling costs) is £150 - £100 - £7.45 = £42.55 is that correct?

If so why is it cheaper for you to purchase from some one vat registered if their price is £85.11 + VAT.

Do you just pay the difference, or do you claim back vat you pay on the goods then send off vat you charge on them? in which case you would end up paying the full £22.34 on the goods in vat and not the £7.45 making profit £27.66 a £14.89 loss.

You are over complicating the issue

Work out your prices ignoring the VAT amounts. You buy at 100 + VAT and sell for whatever you wish plus VAT.

[andy]

ok, thanks for your help, on last question

would it be legite if a company over the threshold was registered for vat but in order to be able to sell to non vat registered sole traders decided to open another small company which was not over the threshold and not register that company for vat.

that way they can sell to both registerd and non registered and be as competative as possible.

[greedyboy]

Originally Posted by andy

ok, thanks for your help, on last question

would it be legite if a company over the threshold was registered for vat but in order to be able to sell to non vat registered sole traders decided to open another small company which was not over the threshold and not register that company for vat.

that way they can sell to both registerd and non registered and be as competative as possible.

You can not have the best of both worlds and it would NOT be legit.

If you are a sole trader, you personally are VAT registered and not a company. Therefore you HAVE to charge VAT on everything you sell, regardless of how many companies you set up.

Also if you are about tho hit the threshold you should, or you accountant should be registering now for VAT. It's a long time since I registered but I am pretty sure you have to estimate when you will hit the theshold and be registered from that date onwards, not after.

For example if you are turning over on average £10K a month, at month 4 (£40K) you should be applying for VAT registration to start at month 6. Your accountant should be able to advise you on the exact procedure.

If you list an example product with your buying and selling price, I will tell you exactly how you need to calculate your pricing as an example of being VAT registered.

[andy]

I see thanks alot for your help you have been very helpful.

in terms of import export, imported goods will be charged vat, yes?

what about exports if I sell to someone in dubai do they pay the uk vat charges as well as their own countries import taxes. or just their countries import charges and no uk vat?


Thanks.

[greedyboy]

Originally Posted by andy

in terms of import export, imported goods will be charged vat, yes?

what about exports if I sell to someone in dubai do they pay the uk vat charges as well as their own countries import taxes. or just their countries import charges and no uk vat?

You can claim the VAT back that you incur at the point of import, so just ignore the VAT part of your buying price.

Exporting is a whole different thing when accounting for VAT. However you essentially do not charge VAT exporting outside of the EU.

It gets even more complicated when you import something with intent to re-export it again and I wouldn't worry about the accounting procedures for this as I presume your stock will be warehoused by you prior ot be exported.

One thing of interest, if you import something and it is faulty, you can claim the duty back that you paid when you ship it back to the supplier.